EMV Payment Technology & Retail Floral

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The retail floral industry is quite different from other forms of retail and the implications of the EMV payment deadline is another example of that.

The retail floral industry is quite different from other forms of retail and the implications of the EMV payment deadline is another example of that.

Most retailers have been hearing a lot about the new EMV payment standard and the October deadline. It’s important because at the deadline there is a shift in liability. Merchants that are not using EMV payment technology become liable for losses that the EMV process would have prevented.

What kind of loss does EMV prevent? The EMV process prevents the use of counterfeit credit cards through two changes. The first is that the credit card itself carries a computer chip that cannot be forged. A traditional credit card might be easy to counterfeit, but a chip card is not.

The EMV process also requires the cardholder to provide a secure PIN in order to complete a purchase. This is a form of what is known and multi-factor authentication. A purchase requires two different factors – something the cardholder has (a secure physical token in the for of the chip card) and something they know (the secret PIN). The cardholder enters the EMV chip card into the EMV payment terminal, enters their PIN, and waits for the credit card company to approve the transaction.

Now, pre-deadline, merchants are protected from liability on sales charged to counterfeit credit cards. That all changes after the October deadline.

Imagine a bad guy steals a credit card number – one that belongs to the legitimate Visa of Jane Hancock. He creates a counterfeit credit card with this number and uses it to make in-store, card-present purchases (preferably anonymous, he does not want this fraudulent activity traced back to him).

Eventually Jane gets her statement and sees purchases she did not make. She contacts Visa, and they remove those charges from her account. Visa also pays the merchant, and the merchant does not lose out.

After the October deadline that changes. If the merchant does not use EMV technology (which would prevent the fraudulent charges) they are liable. Again Jane gets the charges removed from her account, but the merchant does not get paid.

If you ran something like an electronics store (or anything else with high-value items that could easily be resold on the black market) this is obviously really important.

But, as is so often the case, the retail floral industry is different, and the implications of EMV are another example of that.

EMV only protects card-present, in-person transactions, and these are relatively uncommon. Most florists do approximately 70% of their business over the phone, and EMV does not protect these transactions.

Same thing with an e-commerce floral website. Mosts florist have a website, an online flower shop, that is e-commerce enabled (customers can order and pay online) that is responsible for a good percentage of their total sales. Again EMV does nothing to protect the florist when it comes to these sales.

In the retail floral industry less than 30% of sales are in-person. About 70% of these in-person sales are charged to credit cards. That means that only about 20% of sales in the retail floral industry can be secured using EMV technology.

The risk from the 20% that could be protected by EMV is also less than in other kinds of retail. Most florists aren’t likely to see a really high-value in-person sale unless it was some kind of event work, and that isn’t the kind of anonymous purchase (or easy-to-resell item) that is attractive to counterfeiters.

EMV payment technology is an important step forward for all retailers, but retail florists have less to gain. The costs of rushing into a bad decision regarding hardware, contracts, etc. are likely to far outweigh the risk of waiting and making an informed decision.

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